First Amendment Concerns About Internet Radio Bill Not Just Overblown But Completely Backwards

from the let's-do-this-slowly dept

I've been tossing around a longish blog post about some of the controversy concerning the Internet Radio Fairness Act (IRFA) over the past month or so, but haven't had a chance to put it all down in a blog post. I did, however, wish to pick up on a small thread that got a brief spark of attention from some people who don't seem to understand legal stuff in the slightest. It started with musician David Lowery (you may remember him from past nonsensical rampages) claiming that Section 5 of the bill muzzled free speech and thus violated the First Amendment. This isn't just wrong. It's completely backwards. But the language and history here is a bit complex, so let's dig in a bit.

First off, you have to understand that the amounts that satellite and internet radio pay for a "performance right" for broadcasting songs is not (generally) an individually negotiated rate, but rather is set by the Copyright Royalty Board, using a variety of questionable standards. As we've noted in the past, the CRB is notoriously bad at setting reasonable rates -- and part of that is because part of its very charter is to block disruptive innovation if it has an impact on "generally prevailing industry practices." Thus, it tends to set rates super high. This is exceptionally bad for innovation, competition and for artists in the long run, though I'll get to that in another post. One thing that it more or less ensures is that these industries will be dominated by a very small number of super large players, because no one else will be able to afford the rates -- and this effectively locks in the top guys. That's what's happened, as you have Sirius dominating satellite radio and Pandora dominating internet radio. But the rates are so crazy that it's difficult to impossible for these companies to ever be profitable.

We'll get back to that in a moment. But, now, go ahead and read the full text of the bill if you'd like. For this discussion, jump over to Section 5, entitled "Promotion of a Competitive Marketplace." The section is relatively short.

SEC. 5. PROMOTION OF A COMPETITIVE MARKETPLACE.

(a) Limitation of Antitrust Exemptions-

(1) EPHEMERAL RECORDINGS- Section 112(e)(2) of title 17, United States Code, is amended--

(A) by inserting ‘, on a nonexclusive basis,’ after ‘common agents’; and

(B) by adding at the end the following: ‘Nothing in this paragraph shall be construed to permit any copyright owners of sound recordings acting jointly, or any common agent or collective representing such copyright owners, to take any action that would prohibit, interfere with, or impede direct licensing by copyright owners of sound recordings in competition with licensing by any common agent or collective, and any such action that affects interstate commerce shall be deemed a contract, combination or conspiracy in restraint of trade in violation of section 1 of the Sherman Act (15 U.S.C. 1).’.

(2) DIGITAL SOUND RECORDING PERFORMANCES- Section 114(e) of title 17, United States Code, is amended by adding at the end the following:

‘(3) Nothing in this subsection shall be construed to permit any copyright owners of sound recordings acting jointly, or any common agent or collective representing such copyright owners, to take any action that would prohibit, interfere with, or impede direct licensing by copyright owners of sound recordings in competition with licensing by any common agent or collective, and any such action that affects interstate commerce shall be deemed a contract, combination or conspiracy in restraint of trade in violation of section 1 of the Sherman Act (15 U.S.C. 1).

‘(4) In order to obtain the benefits of paragraph (1), a common agent or collective representing copyright owners of sound recordings must make available at no charge through publicly accessible computer access through the Internet the most current available list of sound recording copyright owners represented by the organization and the most current list of sound recordings licensed by the organization.’.

The important thing to understand here is that there's currently an antitrust exemption for SoundExchange, the organization that collects money from internet and satellite radio offerings (and sometimes has difficulty finding artists to pay them). SoundExchange basically needs an antitrust exemption because it is, by definition, a monopoly. What the bill is doing is something simple which is actually beneficial for artists. It's saying that SoundExchange can't use that antitrust exemption to try to stop artists from having the option, if they want to go do direct deals with internet or satellite radio providers. The second part is similar, but not referencing an antitrust exemption. It's just saying that any group that is representing multiple artists can't seek to block other artists from choosing to do a direct deal.

Sirius XM, in particular, has been trying to negotiate direct deals that route around SoundExchange. Now, why would artists ever want to negotiate directly with a Sirius or Pandora when they've already got the Copyright Royalty Board forcing ridiculous high rates on those providers? It's not as if those sites will choose to pay more directly. However, what they can do is offer better service than SoundExchange. That is: they can pay faster, they can provide more data and details, better access to users, etc. And that's what both companies are attempting to do. Also, for artists who actually act as their own label, they can actually make more money because they're cutting out a lot of middlemen who take their cut (it's convoluted, but click that link to see the details).

So, short version: it's certainly not for everyone, but some artists might find it beneficial to go direct. If they choose not to, they can still have SoundExchange collect and distribute their money and that's fine as well.

Now, jump to March of this year... when Sirius sued SoundExchange and A2IM (the RIAA of indie labels) claiming antitrust violations. Sirius argues in its lawsuit that SoundExchange and A2IM conspired and colluded to effectively forbid artists from going direct. Because proving direct collusion is difficult, Sirius' lawsuit is filled with circumstantial evidence, which doesn't prove an antitrust violation, but infers that there might be fire behind the smoke. The goal, there, is to get to discovery to try to suss out some smoking guns of collusion. So, the lawsuit includes various bits of circumstantial evidence, including a number of artists and indie labels that Sirius reached out to who flat out told them that A2IM prevents direct licenses, or that they'd have to first ask A2IM for permission. As part of the circumstantial evidence, Sirius also points to this blog post from A2IM that argues against doing direct licenses.

That lawsuit is still crawling along, so it's unclear if it's going anywhere. Honestly, proving collusion is crazy difficult, and I doubt Sirius will succeed, but some of that circumstantial evidence is eye-opening.

And that leads us to Section 5 of IRFA. As you can read above, what it makes clear is that the existing antitrust exemption cannot be used to "prohibit, interfere with, or impede direct licensing" and similarly that any group acting for some artists could violate antitrust laws by blocking the free will of other artists to negotiate their own deals. In other words, the bill makes it clear that if A2IM or SoundExchange really are colluding to impede artists from choosing to do direct deals, that could be seen as an antitrust violation. This, then, is about protecting artists and indie labels from large organizations like SoundExchange or A2IM, should they try to block those artists and labels from voluntarily doing direct deals.

So you would think that self-declared, if often confused, "defender of artists rights," David Lowery, would like that. But he doesn't for reasons that suggest a serious misreading of the bill or misunderstanding of this background. He points to the language, and then at the text of the Sirius lawsuit, apparently not understanding the nature of circumstantial evidence, and argues that "This is the type of explanatory speech — not conduct — that Sirius XM thinks is illegal and IRFA definitely would outlaw." The only problem with this statement is, well, everything. It's wrong. Nothing in the bill would outlaw that kind of speech. At all. Nor does Sirius' lawsuit claim that such explanatory speech is illegal. Instead, it is arguing that that blog post, along with a host of other circumstantial evidence, is enough to suggest there's a fire somewhere providing all that smoke. Under IRFA, such blog posts would still be perfectly legal, so long as A2IM didn't also use those blog posts to collude and directly hinder copyright holders from doing direct deals.

All that Section 5 of the bill is saying is that the A2IMs and SoundExchanges of the world can't try to hide behind antitrust exemptions to argue that such coercion to block artists from doing direct deals is free from antitrust scrutiny. And, outside of the exemption, they also cannot restrict artists from doing direct deals.

And yet, Lowery (and some of his followers) have taken up the banner claiming that this is a First Amendment violation and that it censors free speech. What he seems to be missing is that the only speech it blocks is speech that is used to collude or to block artists from voluntarily making a deal. Under Lowery's interpretation of the bill, collusion by large companies to force independent artists and labels to do business their way only is legal... because it's free speech to collude..

That's kinda nutty. His argument is, basically: legalize collusion!

A few weeks ago, Lowery gleefully confronted supporters of the bill with this argument at the Future of Music Coalition Conference, which led bill sponsor, Senator Ron Wyden, to hit back and claim that, as one of the strongest defenders of the First Amendment, he'd never support a bill that took away free speech rights. He promised Lowery that he'd review the specific language of the bill, and if there were any interpretations that impacted free speech rights, he'd fix them.

And he followed through with that, asking the Congressional Research Service to look into the matter, which it did. In a note published last week, they make it quite clear that it is extremely unlikely that there would be a First Amendment issue raised by the bill:

... it seems unlikely that, in practice, Section 5 would impinge upon First Amendment rights for a few reasons.

They then go on to detail those reasons -- which can be summed up as, Congress has the right under its authority to regulate interstate commerce, to create antitrust law that blocks collusion (as it applies to interstate commerce). Basically, since antitrust law is Constitutional, so is Section 5:

The antitrust laws are generally considered to comport with the First Amendment, because though the Sherman Act may restrain speech on occasion, the restraint is incidental to Congress's legitimate goal of maintaining a free market. In the case of Section 5, Congress would arguably be creating a similar prohibition, particularly since the bill specifically references the antitrust laws. As noted above, Section 5 would generally prohibit copyright owners acting jointly from taking any action to interfere with direct licensing negotiations. This provision appears to be intended to further the government's interest in preserving the rights of individual copyright owners to negotiate directly with potential licensees without interference from entities like member-based royalty collection organizations. It could be argued that this is similar to Congress's intent to preserve a free market by enacting the antitrust laws. Under Section 5 an individual copyright owner would have the option, as she always has, of negotiating royalty rates individually or collectively, but with an added protection from interference on the part of groups of copyright owners that might seek to prevent her from exercising her individual rights. If the provision is read to prohibit activity and speech similar to, and not broader than those prohibited by the Sherman Act, Section 5 likely would not violate the First Amendment for similar reasons that the antitrust laws do not violate the First Amendment. The restrictions on speech may be interpreted to be incidental to a valid exercise of Congressional authority to regulate interstate commerce.

In other words, exactly what we were saying: unless you're arguing that collusion is legal because it's free speech, the argument that Section 5 violates free speech is quite unlikely.

Because the CRS is quite thorough, it also does work through some scenarios under which the bill might possibly have Free Speech implications. But the only thing it can come up with is that a court would have to somehow interpret Section 5 to restrict speech beyond what's in antitrust laws (i.e., beyond activity designed to restrain trade). Considering how vocal bill supporters have been about this clause not being intended to go beyond the law, it would be somewhat incredible for a court to have that interpretation.

Of course, to make things even more amusing, Lowery himself posted about this CRS destruction of his key argument... and declared victory. Why? Because the CRS report, in its typically even-handed manner, discusses Lowery's scenario, of a blog post potentially violating Section 5, and notes that "though this hypothetical presents a broad interpretation of the language of Section 5, it is not an implausible one." Lowery cuts off the text at that point and declares victory... conveniently leaving out the detailed explanation of why this isn't a First Amendment violation (as explained above).

The confusion, it appears, stems from yet another misreading by Lowery of the CRS report. He interprets the "not implausible" claim to refer to his overall argument that the bill restricts free speech rights. But that is not what it is saying. It is saying that he is right that if a blog post somehow interfered with someone else doing a direct licensing deal -- i.e., restricted interstate trade under existing laws -- then it could violate the Act... but as such would not likely violate the First Amendment. So, the conditions here are that the blog posts themselves would have to actually impede trade, which the CRS report itself notes would require a very broad interpretation of the bill, one that is quite unlikely.

In the end, this appears to be much ado about nothing. The original complaint was a misread, which the CRS report clearly corrects, and Lowery doubles down by then misunderstanding the report itself. Still, from this vantage point, it's been rather amusing to watch a somewhat confused David Lowery thinking that he's "protecting artists," while he's been arguing against a provision in the bill that is actually 100% designed to protect artists against collusion to block them from doing their own deals -- deals which (especially for truly independent artists) could be more lucrative. It would be almost comical, if it weren't that a bunch of artists who haven't understood all this have been parroting Lowery's claims, believing that they're arguing for their own self-interest, when the reality is that they're literally arguing that organizations like SoundExchange and A2IM should be able to collude and block their ability to negotiate favorable deals.

Re: Re: "In the end, this appears to be much ado about nothing."

hahahahahah... so this bill has real censorship and you say it doesn't, and SOPA had none but you said it did... hahahahahahahaha... phew... you are some crazy chickens ya'll... hahahahahahhaha... tummy hurts from laughing too much...

Re: Re: Re: "In the end, this appears to be much ado about nothing."

Blocking access to sites at the domain level without an adversarial hearing - not censorship.

Allowing complete access to a hypothetical blog post but holding the writer(s) accountable after it is proved the blog post was part of a deal that violated existing anti-trust law - censorship.

Honestly, what's being censored even in the unlikely scenaro that a post is found to be so deeply connected to collusion? Where are the provisions in this bill to then block access to or censor that speech?

Re: "In the end, this appears to be much ado about nothing."

love it - this is like mike's "not much to say about it" twelve post tirade on trying to make sense of artists against exploitation in the wake of the letter to emily... classic... I have nothing to say except to write volumes about something meaningless... the lady doth protest too much me thinks!

Yes! We took down that Lowery bastard. No one is as perfect as us. We are the best. We understand everything and are smarter than everyone else. And now we can take down that crazy Lowery character. Damn him and his mistakes. He was once critical of us, so we shall shred him apart anytime we can. We will shit on him and show him we are boss. We are the best, most perfect beings. We know everything. We can tell multinational organizations that they are idiots, and we can understand antitrust law better than a rock musician. How dare he chide us. Nobody questions us, the perfect beings.

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Well, AJ, your new strategy against Mike is a lot more like the classic troll and it seems to be inspired by into_the_nonsense. It is painful to read though since you clearly do not understand the heart of trolling. I would suggest another approach to it, cause this is not working out for me.

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Yes! Wasn't it a gloriously brutal takedown? Mike got in such magnificent burns, such as that Lowery is "often confused" and his argument is "kinda nutty"! Perhaps we went to far... after all, the last time Lowery wrote about us, all he did was dub me "Barnacle Boy", explicitly question whether we are actually human beings, make dumb cracks about age/weight/looks, and compare us to Orwell's 1984.

We sure showed him! Maybe we really did go too far. Lowery's insults were all so measured and sensible, and all perfectly constrained to our arguments and the things we've said, rather than relying on childish ad-homs right? Then we had to go and call him "often confused" -- I guess we really lowered the bar.

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Is a monopoly really necessary?

Let's get rid of the collection agency monopoly altogether and create a registry to facilitate direct negotiations between artists and radio stations. Keep compulsory licensing as an upper bound on pricing but allow radio stations to negotiate better deals with individual artists.

So, basically, "I don't care if there's a chilling effect on speech when I don't agree with that speech."

You jump through a lot of hoops to try to explain why blog posts providing explanatory information should be censored, but come on. I think we'd all agree that providing artists with information to help them in their careers shouldn't be a crime.

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Indeed. Also this chestnut:

So, the conditions here are that the blog posts themselves would have to actually impede trade, which the CRS report itself notes would require a very broad interpretation of the bill, one that is quite unlikely.

Really?! That's an AMAZING about-face coming from a guy who spreads FUD constantly about the threat of IP laws being broadly interpreted.

I'm simply stunned that people can't follow the thread of his views from post to post and see how Romney-esque all of these flip-flops are. He's far sleazier than any record executive I've ever met.

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Except it is very clear that to interpret this bill as banning blog posts about doing direct deals you'd have to be an idiot. It is like saying a ban on a harmful substance is also a ban on any information about it.

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So, basically, "I don't care if there's a chilling effect on speech when I don't agree with that speech."

Where did I say anything like that? Because that's not what I said or meant and you must know that. No one said anything about whether or not people agree with the speech. As you should know, I've defended the speech of tons of people I disagree with and would do so again.

All I'm pointing out is WHAT THE CONGRESSIONAL RESEARCH SERVICE said: which is that this isn't a First Amendment violation.

You jump through a lot of hoops to try to explain why blog posts providing explanatory information should be censored, but come on

Holy fuck. I said no such thing. I said exactly the opposite.

Terry: you used to be someone *reasonable* who I disagreed with. What happened?

I think we'd all agree that providing artists with information to help them in their careers shouldn't be a crime.

Indeed. Which is why we explained why it's NOT illegal under this bill.

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Where did I say anything like that? Because that's not what I said or meant and you must know that. No one said anything about whether or not people agree with the speech. As you should know, I've defended the speech of tons of people I disagree with and would do so again.

All I'm pointing out is WHAT THE CONGRESSIONAL RESEARCH SERVICE said: which is that this isn't a First Amendment violation.

They said that under one interpretation it could be, not that 100% it is not. You yourself have made a career of using whatever meaning suits you to make your point. It's hilarious to watch you flail about. Let's talk about your definition of "property," Mike. Tell us again how what some guy may have said 300 years ago must control our use of the word today. We can just totally ignore what words mean in the present so long as we find someone in the past who said something different, right? Maybe Lowery is using the definition of "free speech" that Pliny the Elder used 2,000 years ago.

Terry: you used to be someone *reasonable* who I disagreed with. What happened?

Really? You are the biggest, most arrogant complete fucking asshole in the whole debate. All you do is whine and tear everything and everyone else apart. Your blog is a testament to the power of hate. Every post drips with hatred of the world. And you can't stand to have even the slightest thing you post be questioned. You've made a career out of tearing everyone else down, and you can't even discuss the simplest thing with a detractor. What happened is that you turned into a complete douchebag.

I first pointed out that it's silly to use an appeal to authority in a discussion about the factual impact of something. As such I cited Orin Kerr's new paper, which makes that very point. The ONLY reason to name Hume was not, as you argue, to say that his definition is controlling, because it's not, but to show that it's easy to point to definitions that support either side. But we're not arguing who can find more citations. This isn't a law school exercise.

We're not arguing whose definition is controlling. I've never argued that Hume's definition is "controlling." I argued that it's silly to argue about reality based on anyone's "definition" when you can easily point to "definitions" that either side agree with. Instead, I was hoping to focus on looking at the actual characteristics.

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I hope that clarifies any confusion.

That doesn't clarify a thing. Let's start with these two questions that you are purposefully ignoring. These questions are exceptionally relevant to a discussion about the meaning of the word "property," so don't pretend like they aren't relevant.

(1) Do you agree that under the general, legal view today that copyright is "property"? Examples: unanimous Supreme Court calls it "property"; WIPO calls it "property"; Copyright Act calls it "property"; the Executive Branch calls it "property"; law text books call it "property"; millions of people call it intellectual "property"; etc. Let's be clear on this point. Can you agree that there is a consensus, majority view that copyright is "property"? Please actually answer the question.

(2) Do you agree that copyright is "property" as the word "property" is used in both the Fifth and Fourteenth Amendment Due Process Clauses? Please actually answer the question.

Let's not play games. Let's actually discuss whether copyright is "property," what that means, and why it matters. But I think it's important that you admit it if you believe that in other, important contexts copyright is indeed "property."

I'm happy to move on to the rest of your argument that copyright is not "property," but let's have these answers first. The fact that you are so reticent to discuss them tells me that you know they're important too.

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You are conflating the idea of a copyright as intangible property with the idea of copyright as a property right. I've called you out on this before and you ran away from the thread, so I assume you won't respond to it here either.

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This article is the polar opposite of the First Amendment argument presented here in the litany of articles related to SOPA and its Senate countepart. In those articles it was repeatedly stressed that the bill, if passed, could be used to negatively impact free speech by creative interpretations of the law. Moreover, and contary to the statement in the paper by Floyd Abrams, an incidental impact on free speech was simply unsatisfactory and manifestly improper.

Mr. Lowery pointed out that if the bill passes it could be creatively interpreted by some to negatively impact free speech. Moreover, and as noted in the CRS paper, the incidental impact of a law on free speech does not necessarily run afoul of the First Amendment. Of course, the paper likewise noted that Mr. Lowery's concerns were not "untenable".

With the above in mind, it does seem as if this article presents arguments that were categorically rejected in the earlier articles on SOPA and PIPA. Thus, Mr. Hart's comment does indeed have merit when directed at this site. Simply put, you can't have it both ways.

This language does not necessarily seem to be limited to large member-based royalty collection organizations like SoundExchange. It may be broad enough to encompass, for example,the members of an individual band, who might be considered to be individual copyright owners, acting jointly. Under this broadreading of the language, an argument could be made that a band, posting its criticisms of direct licensing negotiations between a licenseeand a copyright owner, would betaking an action that would interfere with a direct licensing negotiation, therebyviolating Section 5.

Though this hypothetical presents a broad interpretation of the language of Section 5, it is not an implausible one. It is possible that the language may be broad enough to cover a blog post by a band expressing their opinion regarding contract negotiations between a licensee and a copyright owner.

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Which, what, redirects to that piece of garbage known as the Trichordist? How nice to see that you're trying to capitalise on a typographical error (techdrit.info, .org, .net) to your twisted benefit. Sorry, mate; Google foiled you once again! You may now resume gnashing your teeth.

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hahaha holy shit... Gwiz that is hilarious -- and, I just checked, and it gets even MORE amazing. They aren't all redirected to Trichordist -- techdrit.com redirects to the Google Public Policy Blog! They are trying to smear us by implying that we are google.

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"hahaha holy shit... Gwiz that is hilarious -- and, I just checked, and it gets even MORE amazing. They aren't all redirected to Trichordist -- techdrit.com redirects to the Google Public Policy Blog! They are trying to smear us by implying that we are google.

Desperate and hilarious. Oh man I love those guys."

I disagree that it's hilarious. It is quite simply a bald-faced attempt at confusion of an internet audience. It's the kind of smear tactic one would expect from a third-rate government, such as North Korea, on par w/their claims that their leaders shot 11 holes in one the first time he played golf.

This is NOT funny. It's, putting it simply, WRONG. It's a breach of trust on the internet community, one that deserves public backlash of the utmost severity. Lowery and anyone else at Trichordist are clearly liars....

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This is NOT funny. It's, putting it simply, WRONG. It's a breach of trust on the internet community, one that deserves public backlash of the utmost severity. Lowery and anyone else at Trichordist are clearly liars...

I agree with the breach of trust part, for sure.

I just think it's funny that they thought they wouldn't get called out on this. The internet never forgets and seldom forgives. Like Leigh was saying, it's like watching "The Threes Stooges Meet the Internet"